WiMAX impact of Sprint-Nextel

We are still not sure if this deal between Sprint and Nextel is happening or not, of given Sprint’s history, if it will be completed at all. (Remember they were going to merge with WorldCon and then they didn’t!) Still, there is a component of this deal which could have a far reaching and perhaps incredible impact on the future of WiMAX, the generic name for fixed wireless technologies. Why? because these two companies together have a near-nationwide footprint in the MMDS spectrum band at 2.5 GHZ, which provides additional potential option for broadband wireless service that other carriers lack. Between them, they pretty much control this spectrum. In an previous post I had pointed this out, but thought it is time to reinforce the issue.

Theoretically, fixed wireless can work in different frequencies, but the WiMAX vision centers around three bands: 2.5 GHz, 3.5 GHz and 5.8 GHz. In the United States, 3.5 GHz is not available, and 2.5 GHz swath is owned by Sprint and Nextel. That leaves 5.8 GHz unlicensed spectrum. But there are some limitations to this spectrum. Lower frequencies have longer range, better wall penetration, and can over come line of sight issues. Higher frequencies like 5.8 GHz are good for backhaul, but when you start using them in consumer laptops or handsets, it is as awkward as a nerd in the playboy mansion.

Now unless Nextel and Sprint decide to do something with the spectrum, aka build out a so-called 4G network which is based on some sort of fixed wireless technology, WiMAX is going to be relegated to the 5.8GHz spectrum, which is good enough for back haul but not good enough for laptops and handsets. The question is why would Sprint-Nextel actually build this one out, especially after spending billions on a 3G network. They would need to squeeze every single dime out of that network before starting to use the 2.5 GHz swath they are sitting on.

They’ve dithered for years over what to do with this, and written down the asset by the odd billion or two over the same period. The synergy of this deal is not that they will deploy in this area because of their combined footprint, but that they won’t. My guess is that the MMDS spectrum will be kept in the cupboard behind the stationery supplies in HQ for the forseeable future.